CVM Orienting Opinion 19

CVM ORIENTING OPINION NO. 19, OF MAY 9, 1990.

SUMMARY: Interpretation of Article 161, § 4, item 'a', of Law No. 6,404, of December 15, 1976, which deals with the rules for the constitution of the Fiscal Council.

1. LAW No. 6,404/76 established, in Article 161, § 4, item 'a', that holders of preferred shares without voting rights or with restricted voting rights shall have the right to elect, in a separate vote, one member and their respective alternate; the same right shall have minority shareholders, provided that they represent, collectively, ten percent or more of the shares with voting rights.

2. For the interpretation of the aforementioned provision, reference is made to the Statement of Reasons that accompanied LAW No. 6,404/76, which clarifies: "The modifications introduced by the Bill into the Fiscal Council are based on the experience of applying DECREE-LAW No. 2,627. In most existing companies, all members of the Fiscal Council are elected by the same shareholders who choose the administrators. In these cases, the functioning of the body almost always reduces itself to formalism empty of any practical significance, which justifies the repeated criticisms made against it and the proposals for its extinction. Experience reveals, however, the importance of the body as an instrument for the protection of dissenting shareholders, whenever they use their right to elect separately one of the members of the Council, and provided that the elected persons have the knowledge that allows them to efficiently use the means, provided by law, for the supervision of the administration bodies".

3. In corporate law, there is a certain number of intangible prerogatives, that is, rights inherent to the quality of shareholders, which cannot be modified or suppressed, whether by the general assembly or by the bylaws. Among such rights, enumerated in Article 109 of the Corporations Law, is the right to supervise the management of corporate affairs (item III of the cited article). Now, perhaps the separate election of members of the Fiscal Council is one of the most effective forms of supervision available to shareholders holding preferred shares, as well as to minority shareholders holding voting shares.

4. This is because, due to the very number of shareholders existing in a corporation, the task of directly supervising corporate administration would be practically impossible. The Fiscal Council is, in this way, the most suitable corporate body to control the activities of the administrators.

5. It was with the aim of making such a body truly representative that the law granted shareholders holding preferred shares the option to elect, separately, a representative and their alternate, a faculty that also exists for minority shareholders holding shares with voting rights.

6. It is necessary to clarify that the cited provision contemplates all preferred shares, that is, it does not restrict such right to registered, endorsable, or book-entry shares, and the rule contained in Article 112 of the Corporations Law does not apply to the hypothesis. This is explained by the fact that the right to elect, separately, a member of the Fiscal Council is a specific form for the exercise of the power of supervision, and the law does not require, in this case, that the shares be in registered form.

7. Article 112 is inserted in the chapter relating to the right to vote, a vote destined to the formation of corporate will. Already the provision in § 4 of Article 161 refers to a special deliberation, destined to safeguard the interests of minorities and preferred shareholders. It is, as can be easily verified, distinct situations, subject to different treatment. Thus, while in the first case the holders of the shares must necessarily be identified, as they will compose the quorum for deliberation on common matters, in the second case it becomes unnecessary to convert bearer shares into other voting shares, as it is a vote aimed exclusively at the election of a member and their alternate to the Fiscal Council.

8. It should also be noted that so that the right attributed by law to preferred shareholders does not become merely nominal, it must be understood that in the separate vote of these shareholders for the election of their representative on the Fiscal Council, controlling shareholders cannot participate, even if they also hold preferred shares. Such participation, if admitted, would result in an effective restriction of the essential right to supervise and in inequitable representation of interests, often contrary, which the law sought to protect.

9. It should also be highlighted that any shareholder, and especially the controller, must exercise the right to vote in the interest of the company, and the vote exercised with the aim of obtaining, for oneself or for others, an advantage to which one is not entitled and that results, or may result, in damage to the company or to other shareholders is qualified as abusive.

Signed Original by
ELISA MARIA CID BRITO R. CORRÊA
Lawyer

Signed Original by
MARIA ISABEL DO PRADO BOCATER
Legal Superintendent

Approved By the Board on 09.05.90.
Publish.

Signed Original by
ARY OSWALDO MATTOS FILHO
President